Tech giant Apple has made commercial history, by becoming the first company to achieve a market-cap of $1 trillion.
The milestone was passed in the wake of sparkling third-quarter results published earlier this week that lightened the gloom hanging over the sector after disappointing figures from Facebook and Twitter.
Services are paying off
A number of factors have propelled Apple into this unique position.
Apple has branched out into offering services, such as AppleCare and Apply Pay. Here, third-quarter revenues soared 31% on the third quarter of last year to $9.548 billion.
That’s still some way behind the $24.452 billion earned by sales of the iPhone (a 20% rise on the same period last year) but comfortably ahead of sales of the iPad (down 5% on the same period last year at $4.949 billion) and the Mac computing range, down 5% on the same period last year at $5.592 billion.
A second, growing revenue stream relates to “other products”, including Apple TV and Beats audio products, where revenue surged 37% on the same quarter last year to $3.740 billion.
Apple spared others’ troubles
This is proof of Apple’s huge cash reserves but it could be said to be artificially inflating the share price, as Apple becomes its own best customer in terms of stock purchase. Taking shares out of circulation increases the value of those left in the market, and is a tax-effective way of rewarding shareholders in comparison with paying bigger dividends.
A third factor is that Apple is free of the current woes afflicting social media groups such as Facebook and Twitter. Battered by accusations of allowing their users to peddle “fake news”, and facing the threat of increasing regulation, their share prices will tend to suffer in comparison to Apple.
In the same way, mutterings about Facebook and Google being modern-day equivalents of the Standard Oil monopoly a century ago that ought, similarly, to be broken up are unlikely to affect Apple, which does not have a monopoly in any of the areas in which it operates.
Ironically, shares in the $1 trillion Apple are not seen as that expensive, Reuters has reported. They trade at about 15 times expected earnings, against 82 times for online retailer Amazon.